Fairness in Delegated Bargaining

摘要

This article examines whether a principal prefers to hire a fair or a selfish agent. A fair agent cares to some extent for the well-being of other people and thus he also cares for the principal. Therefore, if the agent performs individual work, the principal is always better off to hire a fair agent. However, we show that when a third party with conflicting interests is introduced, it may be advantageous for the principal to hire a selfish agent. The reason is that the selfish agent will be a tough bargainer not only when negotiating his employment contract with the principal but also when dealing with the third party, for example, when selling the principal's product to a buyer.